| MOSCOW, March 4
MOSCOW, March 4 BP, which lost its first
deal to drill for oil in Russia's Arctic to ExxonMobil,
tried to negotiate a new deal with Russian state oil company
Rosneft and was again beaten to the punch by its U.S.
ExxonMobil won access to the Arctic Laptev Sea fields, where
Rosneft's prospective reserves amount to 36 billion barrels of
oil equivalent, under a deal last month, but
three industry sources said BP had also been in talks with
Rosneft to explore several blocks there.
Setbacks have become the norm for BP's activities in Russia,
where it formed a joint venture, TNK-BP, in 2003, by
pooling its assets with those of four Soviet-born billionaires.
It is currently selling out of that troubled venture to Rosneft.
TNK-BP became a battle of wills between the British firm and
the tycoons, who blocked BP's first attempt to form an Arctic
exploration deal with Rosneft, a deal that BP executives had
compared to the opening of a new North Sea.
Having negotiated that venture, which the tycoons said was
in breach of the TNK-BP agreement, BP had to step aside and
watch ExxonMobil take the spoils in 2011.
Now Rosneft has preferred ExxonMobil for the Laptev fields,
even though BP will become a significant shareholder of Rosneft
in April and name two directors to its board as part of the
takeover of TNK-BP.
The government has even offered Dudley a seat on the board
at state controlled Rosneft, headed by Igor Sechin, an
influential ally of President Vladimir Putin.
BP and Rosneft were unable to respond immediately to a
request for comment.
BP has been left a bystander as a rush for Arctic drilling
deals got under way. Italy's Eni and Norway's Statoil
have also struck partnerships with Rosneft, trading
technology and capital for access to tens of billions of barrels
of prospective offshore Arctic reserves.
The $55 billion cash-and-share deal to sell TNK-BP to
Rosneft, freeing BP from its fractious partnership and making it
a 20 percent shareholder in Rosneft, appeared to promise a
second shot at an exploration deal with Rosneft.
Sechin has said Rosneft would remain interested in upstream
projects with the British major after the takeover, "which we
will develop with BP as a partner, not as a shareholder".
Now, out of nearly 30 Arctic licence areas held by Rosneft,
all but five have been parcelled out in upstream joint ventures
with other companies, leaving slim pickings for BP.
The loss of the Laptev blocks to ExxonMobil, coupled with
concerns about BP's role in the integration of TNK-BP, prompted
Dudley to fly to Moscow in the middle of February, the sources
"Dudley came to Moscow to try to salvage the situation," one
Another source said Dudley met Sechin, the architect of
Rosneft's foreign upstream partnerships.
The loss of the Laptev Sea acreage is an indication of the
difficult path still ahead for Dudley, who as CEO of TNK-BP was
driven out of Russia in a struggle for control of that venture.
Sechin himself, at pains to indicate that the
conflict-ridden days of TNK-BP would end with the takeover, has
sought to show Rosneft can work with Dudley, who was nominated
to its board by the government.
But in a sign of the differing roles for BP and ExxonMobil
at Rosneft, Vedomosti daily reported on Monday that as a state
appointee, Dudley would have to vote by government directive on
major issues, such as large deals and key appointments.
By contrast, ExxonMobil's top financial official, Donald
Humphreys, has been nominated as an independent and as such can
decide for himself how to vote, Vedomosti said. The report could
not be immediately confirmed.
More broadly, it is unclear what rights, if any, BP will
have in managing an expanded Rosneft, while a senior ExxonMobil
executive, Zeljko Runje, was plucked from the Moscow office and
made a vice president at Rosneft at Sechin's behest.
Although a few senior managers with ties to BP remain at
TNK-BP after a purge of Western executives in a 2008 conflict
between BP and its local partners, Sechin is unlikely to move
them to Rosneft.
"He doesn't know any of them," one of the sources said.
Rosneft's sudden decision to expand its Arctic drilling
venture with ExxonMobil may have been intended to protect its
own access to Arctic reserves.
It followed a media report citing a Ministry of Natural
Resources presentation which suggested state companies'
exploration plans were not aggressive enough.
The ministry, responsible for licensing access to mineral
reserves, was lobbying to expand access to Russia's offshore
fields to private companies over protests from Rosneft and state
gas company Gazprom, which had held exclusive rights.
Sources close to BP argue it will have an indirect share of
Rosneft's upstream ventures with rivals through its 20 percent
holding in Rosneft once the buyout of BP and its partners is
finalised at the beginning of April.